Car Sales Will Decline In The Coming Days
In an unusual change of pace, the growth of the local auto industry has slowed significantly as the government and the State Bank of Pakistan (SBP) look for ways to manage the high import bills.
Business Recorder noted that despite the arrival of new vehicles in Pakistan, sales are likely to suffer in the coming days due to government precautionary measures.
Coupled with SBP’s plan to limit full vehicle imports (CBUs) by restricting their funding, regulators are considering raising interest rates to raise car loan rates, in addition to recent increases in car prices.
The government plans to impose a range of taxes on CBU luxury vehicles to limit their growing demand. These measurements made an impressive comparison between the growth rate of the auto industry a few months ago and the current growth rate.
The report notes that the recent handovers should enable companies to achieve “local automaker” status.
On the contrary, all automakers, and especially newcomers, have started lowering the prices of their vehicles due to unforeseen events such as:
- Semiconductor chip crisis
- Scarcity of raw materials
- Increased transportation costs
- Devaluation of the national currency
Problem Still Exists
Legislators have recognized that car prices, sales and production cannot be controlled by tax cuts. Reports from around the world suggest that car prices are likely to keep rising, as the above issues are likely to persist throughout the year.
The report mentioned that this may have been part of the government’s program to cut taxes and attract new entrants before prices were regulated.
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Currently, the government is considering introducing various taxes and other restrictions to prevent CBU vehicles from being imported, while SBP has raised interest rates to curb CBU imports.
The government is also considering setting up a committee to set prices and prevent automakers from raising them. The Ministry of Industry and Production has also proposed the creation of a regulator that sets car prices in advance.
However, the government is examining the feasibility of this proposal and has not yet made a decision on it.